From reading this article, it appears that these are not Over The Counter bets that are placed between one Investment bank with another. Rather this is a product created and sold by the grid operator NYISO in order to hedge price volatility and collect a fee.

While there is a mention of price manipulation, the article fails to clarify exactly how the prices are "manipulated" in order to favor the banks. The focus seems to be more on "bad banks" making money.